Shares of Boston Scientific (NYSE:BSX) rose nearly 7 percent in pre-market trading today after the FDA approved its Promus Element drug-eluting stent, inaugurating a head-to-head battle between two of the last giants left standing in the Stent Wars.
The Promus Element is BSX’s platinum-chromium iteration of an everolimus-eluting stent like the original Promus, a private-label version of Abbott’s (NYSE:ABT) Xience V device. The private-label deal ended in 2009 and each company began developing their own next-generation designs.
Hank Kucheman, interim CEO for Natick, Mass.-based Boston Scientific, said the news is a huge step for the company.
"This approval marks an important milestone for Boston Scientific – the beginning of a transition to higher margins on our everolimus stent offering in the U.S. as we shift from the Promus Stent to the internally manufactured Promus Element Plus stent system,” Kucheman said in prepared remarks.
The federal watchdog agency’s nod "should represent $200 million in additional annualized gross margin contribution for the U.S. and Japan exiting 2012," he added, part of the $650 million to $750 million Boston Scientific hopes to add to its operating profits "over the next several years."
The company said it expects the early decision to add about $35 million in after-tax charges as it advances up the Promus Element’s U.S. début, but that the move won’t affect its fourth-quarter guidance,
Earlier this year, the FDA approved BSX’s Ion stent, which was also built using the PtCr Element chassis but elutes the drug paclitaxel.
The Promus Element approval comes despite an FDA probe into reports that the Element’s thinner design is prone to longitudinal deformation.
At least two studies and one case study presented at a recent cardiology conference reported incidents in which either a Boston Scientific Ion or Promus stent deformed after it was deployed inside a coronary artery.
Although there’s been only one reported incident of deformation involving a Promus stent from among more than 4,600 implantations in clinical trials, according to the federal watchdog agency, “an unspecified number of significant adverse events had been reported.” Stent shrinkage is relatively rare compared to other problems associated with clearing blocked vessels, Kucheman told investors during the company’s third-quarter conference call.
Pre-market trading drove BSX stock up 5.5 percent to $5.60 opening on Wall Street today. BSX shares closed yesterday at $5.31.